Two offers, two different pricing conventions. Here's the math to translate factor rates into APR so you can compare apples to apples.
Key takeaways
APR (Annual Percentage Rate) is the cost of borrowing expressed as a percentage of the principal, normalized to one year. A $50,000 loan at 22% APR over 24 months means roughly $11,000-12,000 in total interest, repaid in 24 monthly installments. Pay it off in month 12 instead of 24 and you save half the interest.
A factor rate is a multiplier on principal. 1.28 means you'll repay 1.28 × the amount funded — total. A $50,000 advance at a 1.28 factor means $64,000 total repayment, regardless of how fast you pay it.
Crucially: factor rates ignore time. A 1.28 over 12 months and a 1.28 over 6 months cost the same dollars but the second one is twice as expensive in APR-equivalent terms because your money is tied up half as long.
To convert a factor rate to an approximate APR, use:
So 1.28 over 12 months → 0.28 × (12÷12) = 28% APR-equivalent. 1.28 over 9 months → 0.28 × (12÷9) ≈ 37% APR-equivalent. 1.28 over 18 months → 0.28 × (12÷18) ≈ 19%. Shorter terms compress the same fixed cost into less time, which raises the APR-equivalent.
This is an approximation — the precise APR involves the daily debit pattern and is slightly higher because you're paying down principal as you go. But it's accurate within a few percentage points and good enough for decision-making. For the full framework with worked examples, a HowTo methodology, and a calculator that surfaces both simple-cost AND effective amortizing APR, see Factor rate to APR — the real cost of MCAs and RBFs.
You have two offers for $50,000:
On total dollars, Offer A is about $1,700 cheaper. But Offer A repays over 24 months vs. 9 months, so its impact on monthly cash flow is much lighter ($2,594/mo vs. roughly $7,100/mo equivalent for the MCA's daily debits). Choose based on whether your business can absorb the heavier daily debit, not just the total dollar cost.
Regulatory + math sources
APR and factor rates aren't the same and can't be compared by eye. Run the conversion every time. ClearValue Lending presents every offer with both numbers visible by default — that's the bare minimum any honest funding platform or broker should do. The CFPB and FTC both publish guidance on small business financing cost transparency. Ready to compare real offers side by side? Start on small business financing. For more on the underlying products, see MCA vs. bank loan and Short-term vs. long-term financing.
Two offers, two different pricing conventions. Here's the math to translate factor rates into APR so you can compare apples to apples.
This article is for educational purposes and is not financial, legal, or tax advice. Rates, fees, qualification requirements, and product availability are illustrative ranges that vary by lender, market conditions, and individual business profile. ClearValue Lending is a funding platform; all financing is subject to lender partner approval and terms. Always read your contract end-to-end and verify specific numbers before signing.
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